Basic Finance Tutorial - Week 4

 

Banks: “Lying Down to Earn Money”

· Four major state banks (ICBC, ABC, BOC, CCB) in China

· Main profit: deposit–loan spread

· Next: investing deposits into safe assets (90 % gov bonds)

· Service channel fees

· Stronger deposit ability = more profit


Deposit–Loan Spread Factors

· Scale of funds

· Maturity matching

· Risk management


Golden Decade of Banking

· High monopoly threshold, strict licence

· China’s economy surged, high profits

· Threshold now lower, competition rising


Money‑Market Funds

· Inter‑bank market short‑term huge sums, high rate

· Retail barred, MMF pools money to enter

· Yield > bank deposit; rate follows liquidity (ample → low, crunch → high)


Fund Selection Tips

· Look at macro: bull = index, bear = bond

· Look at industry expertise

· Look at timing: RRR/rate cuts favor bonds

· Look at brand: long‑history, big houses


Fund Pitfalls & Experience

· Understand fees: online cheapest, bank sales dear

· Avoid high‑frequency trade

· DCA add more in bear market

· Hold >3 years boosts win rate

· Buy within valuation safety margin


Shadow Banking

· Banks + trusts bypass regulation

· Capital efficiency ↑, retail risk ↑

· Big‑bank packaging but risk nature unchanged

· Suggestions: read prospectus, verify channel, check fund‑raiser, beware high promised yields

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